Why oil could plunge further next week

Commodity analysts are contemplating a further fall in oil prices this week with sanctions on Iran expected to be lifted and a fresh nuclear deal put in place.

Tehran said the International Atomic Energy Agency (IAEA) is set to confirm the country has met obligations by Friday.

Iranian Revolutionary Guards drive a speedboat in front of an oil tanker at the port of Bandar Abbas.

Atta Kenare | AFP | Getty Images

"The IAEA will issue its final report on Friday to confirm Iran has met its commitments under the JCPOA," Deputy Foreign Minister Abbas Araqchi said, according to a number of media reports.

The JCPOA, or joint comprehensive plan of action, is an international agreement setting out the terms of Iran's nuclear program.

The comments appear to echo a statement last week from U.S. Secretary of State John Kerry.

"We are days away from implementation if all goes well," Kerry said.

Implementation day is when the lifting of sanctions by the U.S .and the EU comes into effect and a fresh nuclear deal begins.

Iran has told Reuters final steps are taking place Thursday and it's now ready for an agreement.

"The core vessel of the Arak reactor has been removed…and IAEA inspectors will visit the site and report it to the IAEA," the Atomic Energy Organization of Iran said.

Tehran expects sanctions could be lifted before Monday next week and that means the Islamic republic can turn the oil taps back on.

Iran has the fourth-largest oil reserves in the world and the International Energy Agency believes it could add as much as half a million barrels per day to exports as soon as sanctions are lifted.

In an already oversupplied market this could help push down an already plummeting oil price.

"There's not been an accommodation possible in OPEC…Saudi Arabia and the Gulf countries are not going to cut back, to make room for Iran coming back into the market," IHS vice chairman of consultancy Dan Yergin told CNBC on Wednesday.

However Jason Gammel, equities analyst at Jefferies told CNBC that a meaningful further drop is unlikely, even allowing for the added Iranian supply.

"We are starting to reach the stage where we start to cause interruptions to the physical supply of oil, so I do think the price needs to come up from where it is," said Gammel on Thursday.